Exhibit 10.5


 





EMPLOYMENT AGREEMENT


 


This Employment Agreement
(“Agreement”) is made on this 8th day of December, 2015 (“Effective Date”), among Private National Mortgage
Acceptance Company, LLC (“PNMAC” or the “Company”) and PennyMac Financial Services, Inc. (“PFSI”),
each having a principal place of business at 6101 Condor Drive, Moorpark, CA 93021, and Stanford L. Kurland (“Executive”),
whose residence is at 6005 Williams Bent Road, Hidden Hills, California 91302.


 


RECITALS


 


WHEREAS, PNMAC is a validly
existing Delaware limited liability company duly organized under the Fourth Amended and Restated Limited Liability Company Agreement
Of Private National Mortgage Acceptance Company LLC entered into as of May 8, 2013 (the “PNMAC LLC Agreement”);


 


WHEREAS, PFSI is a validly
existing Delaware corporation duly organized under the Amended and Restated Certificate of Incorporation of PennyMac Financial
Services, Inc. filed with the Securities and Exchange Commission (the “SEC”) on May 14, 2013, and the Amended and Restated
Bylaws of PennyMac Financial Services, Inc. filed with the SEC on August 19, 2013;


 


WHEREAS, Executive currently
serves as PNMAC’s Chief Executive Officer (“CEO”), and PFSI’s CEO and Chairman;


 


WHEREAS, PNMAC and PFSI
executed an employment agreement with Executive effective April 20, 2013 that, by its terms, will expire on or before April 20,
2016 (the “April 2013 Employment Agreement”);


 


WHEREAS, PNMAC and PFSI
desire to obtain the benefit of continued services of Executive and Executive desires to continue to render services to PFSI and
PNMAC and their subsidiaries; and


 


WHEREAS, PNMAC, PFSI, and
Executive each have determined that it would be to the advantage and best interest of PNMAC, PFSI, and Executive to enter into
this Agreement to establish the terms under which Executive would continue to render services to PNMAC and PFSI.


 


NOW, THEREFORE,
in consideration of the mutual promises and covenants herein contained, PNMAC, PFSI, and Executive agree that the following terms
and conditions shall apply to Executive’s employment:


 


AGREEMENT


 


1.Term. PNMAC hereby agrees to employ
Executive and Executive hereby accepts employment with PNMAC for the period commencing with the Effective Date and expiring on
December 31, 2018 unless earlier terminated in accordance with the provisions hereof (the “Term”).


 


2.Duties. Executive shall continue
to be employed by PNMAC as the CEO of PNMAC and shall also continue to serve as the CEO and Chairman of PFSI, and shall perform
the usual and customary duties of such offices. Executive shall report only to the board of directors of PFSI (the “Board”),
and shall have general supervision, direction, and control of the business, officers, and employees of PNMAC. All officers and
employees of PNMAC shall report directly or indirectly to Executive. Executive shall have full latitude to hire, discharge, discipline,
promote, and compensate PNMAC officers and employees, and shall have full managerial and financial authority over PNMAC, subject
to such directions and control as the Board may specify from time to time. The duties and title of Executive may be changed from
time to time by the mutual consent of Executive, PFSI, and PNMAC without resulting in a breach or rescission of this Agreement.
Notwithstanding any such change from the duties originally assigned and specified above, or hereafter assigned, the employment
of Executive shall be construed as continuing under this Agreement as modified; provided, however, that any material diminution
in Executive’s duties imposed by PNMAC or PFSI without Executive’s consent shall be construed as a termination of Executive
Other Than for Cause as described in Section 7(d) of this Agreement.




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3.Outside Activities. Executive shall
devote all of Executive’s full business time, ability and attention to the business of PNMAC during the Term of this Agreement.
Notwithstanding the foregoing, however, Executive may pursue other appropriate civic, charitable or religious activities so long
as such activities do not interfere with Executive’s performance of his duties hereunder. In addition, Executive may engage
in other business activities or investments during the Term provided such activities or investments do not compete with PNMAC or
its subsidiaries and are fully disclosed to the Board prior to the time of such activities or investments (except that investments
representing less than five percent (5%) of the securities of companies that are regularly traded on a national securities exchange
need not be disclosed to the Board). Executive shall also be permitted to serve on the board of directors of any non-profit entity,
subject to prior full disclosure to the Board.


 


4.Board Appointment. For so long
as Executive is employed by PNMAC under this Agreement, Executive shall serve as Chairman of the Board, and no PNMAC employees
other than Executive and David A. Spector shall serve on the Board of Trustees of PennyMac Mortgage Invetment Trust (“PMT”).
Executive shall fulfill all duties required of a member of the Board without any additional compensation. In the event Executive’s
employment is terminated in accordance with this Agreement or Executive resigns or otherwise becomes unaffiliated with PNMAC, Executive
shall, and does hereby agree to, tender his written resignation from the Board effective on the date of termination, resignation
or non-affiliation.


 


5.Compensation and Benefits.


 


(a)Base Salary. In consideration for
Executive’s services hereunder, during the Term PNMAC shall pay or cause to be paid as base salary to Executive an amount
of not less than one million Dollars ($1,000,000.00) per year, prorated for any partial years of service, less any applicable deductions.
Said base salary shall be payable in conformity with PNMAC’s normal payroll periods. Executive’s base salary shall
increase annually at a rate determined by the Board and the Compensation Committee. For all purposes of this Agreement, the “Compensation
Committee” shall mean the compensation committee of PFSI. Increases in base salary shall be effective not later than April
1 of the Fiscal Year in which the increase is granted. For purposes of this Agreement, the term “Fiscal Year” shall
mean the period beginning on January 1 and ending on December 31 during the Term of this Agreement.


 


(b)Cash Incentive Compensation. During
the Term, Executive shall be eligible to participate in all executive incentive programs offered by PNMAC. PNMAC shall pay to Executive
for each of the Fiscal Years during the Term of this Agreement an annual cash incentive compensation award at a level determined
by the Board and the Compensation Committee pursuant to an annual targeting process establishing performance targets and designating
cash incentive compensation to be earned as a result of meeting those performance targets (the “Bonus”); provided,
however, that the annual performance targets established for Executive and the cash incentive to be earned as a result of meeting
those targets shall each be set at levels and amounts at least as favorable to Executive as those for other senior executives at
PNMAC. The Bonus shall be paid to Executive in the year following the year to which the Bonus relates at the same time that such
cash incentive compensation is paid to other PNMAC senior executives, and no later than October 31st of such year, provided
that, except as set forth in Sections 7(a), (b), and (d), Executive must be employed on December 31st of the year to which
the Bonus relates to receive any portion of the Bonus.


 




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(c)Equity Incentive Compensation. PNMAC
shall grant to Executive equity incentive compensation pursuant to the terms of PFSI’s 2013 Equity Incentive Plan (the “EIP”)
or any other equity incentive plan adopted by PNMAC or PFSI for each of the Fiscal Years during the Term of this Agreement in a
form and amount determined by the Board and the Compensation Committee pursuant to an annual targeting process establishing performance
targets and designating equity incentive compensation to be earned as a result of meeting those performance targets; provided,
however, that the annual performance targets established for Executive and the equity incentive compensation to be earned as
a result of meeting those targets shall each be set at levels and amounts at least as favorable to Executive as those for other
senior executives at PNMAC. The equity incentive compensation shall be granted at the same time as PNMAC grants equity incentive
compensation to its other senior executives in respect of such Fiscal Year (but in no event later than June 30 following the end
of such Fiscal Year). Any equity incentive compensation granted to Executive pursuant to this Section 5(c) shall vest in accordance
with the terms set forth in the EIP; provided however, that notwithstanding anything to the contrary contained in the EIP
or any other document, any unvested equity incentive compensation granted to Executive pursuant to this Section 5(c) shall automatically
and immediately vest if any of the following events occur: (i) Executive’s death; (ii) Executive’s Disability as defined
in Section 7(a); (iii) PNMAC’s termination of Executive Other Than for Cause as described in Section 7(d) of this Agreement;
(iv) Executive’s termination of this Agreement for Good Reason as that term is defined in Section 7(d) of this Agreement;
or (v) the expiration of the Term pursuant to Section 1 of this Agreement before any new agreement is reached to continue Executive’s
services to PNMAC. Earnings on vested equity granted pursuant to this Section 5(c) shall be considered past cash compensation (i.e.,
“sweat equity”), whereas earnings on equity that has not yet vested shall be considered current cash compensation.
In the event of a sale, merger, consolidation, reorganization, restructuring or transfer of assets of PNMAC or PFSI in which PNMAC
or PFSI, as applicable, is not the surviving entity or in which it survives as a subsidiary of another entity (a “Transaction”),
and the shares or equity securities of the surviving entity or parent thereof are publicly traded on a recognized stock exchange
or over the counter market, the equity incentive compensation to be granted pursuant to this Section 5(c) after the date of the
Transaction shall be granted in accordance herewith in the form of securities of the surviving entity or parent thereof, as applicable.
To the extent that any of the terms of this Agreement governing Executive’s equity incentive compensation conflict with anything
contained in the PNMAC LLC Agreement, the EIP or any other document, the terms of this Agreement control and supersede any such
contrary provisions.


 


(d)Paid Time Off. During the Term,
Executive shall accrue twenty (20) days of paid time off (“PTO”) at Executive’s regular base pay rate during
each year of the Term, prorated for partial years worked, subject to the terms of PNMAC’s employment benefit policies as
they relate to senior executive officers.


 


(e)Medical Benefits. During the Term,
PNMAC shall pay for Executive to undergo an annual comprehensive executive physical appropriate for chief executives such as Executive.
In addition, Executive and Executive’s family shall be entitled to participate in PNMAC’s group medical insurance benefits,
in accordance with PNMAC’s employment benefit policies as they relate to senior executive officers and their families. If
Executive is terminated pursuant to Section 7(a), (b), or (d), PNMAC will reimburse Executive for any amounts paid by Executive
for coverage of Executive and/or Executive’s family under the Company’s group health medical benefits plan pursuant
to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for as long as Executive is eligible to receive such
benefits under COBRA, on the condition that Executive timely elects COBRA and provides the Company with proof of payment of the
applicable COBRA premiums on a monthly basis; provided however, that the reimbursement described in this Section 5(e) shall
be subject to and paid only if and to the extent (1) such reimbursement is permitted by the Patient Protection and Affordable Care
Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, and other applicable law, and (2) Executive
is not otherwise eligible or entitled to participate in group medical benefits offered by a subsequent employer. If PNMAC’s
reimbursement of Executive for COBRA-related payments under this subparagraph 5(e) is not permitted by the Patient Protection and
Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, and Executive is not otherwise
eligible or entitled to participate in group medical benefits offered by a subsequent employer, then PNMAC shall discontinue the
COBRA-related payments provided for in this subparagraph 5(e) and, in such case, PNMAC will pay Executive an amount equal to the
amount that Executive would otherwise be entitled to receive for reimbursement of COBRA-related payments.




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(f)Tax Advice and Financial Counseling.
During the Term, PNMAC shall reimburse Executive for expenses relating to tax advice and financial counseling, subject to reasonable
proof of such expenses, provided that, such expenses shall not exceed twenty-five thousand dollars ($25,000) per year, prorated
for partial years worked. Executive shall have sole discretion in selecting an appropriate tax advisor and financial counselor.


 


(g)Automobile Allowance. During the
Term, PNMAC shall provide Executive with an automobile allowance of one thousand five hundred dollars ($1,500) per month prorated
for partial months worked, which allowance shall be in lieu of any expense reimbursement for automobile or automobile-related expenditures
(other than expenditures for car services or other transportation costs associated with Executive’s business travel, which
shall be reimbursed in accordance with the terms of Section 6 of this Agreement), or use of a PNMAC owned or leased vehicle.


 


(h)Additional Benefits. Executive shall
be entitled to participate in all programs, rights, and benefits for which Executive is otherwise entitled under any bonus plan,
incentive plan, participation plan, extra compensation plan, pension plan, profit sharing plan, savings plan, life, medical, dental,
other health care, disability, or other insurance plan or policy or other plan or benefit that PNMAC or PFSI may provide for senior
executives or for employees of PNMAC generally, if any, in force from time to time during the Term. For the avoidance of doubt,
the rights granted or afforded to Executive under any such plans shall not be less than the most favorable rights and highest amounts
granted to employees of similar or lower position with PNMAC and on terms at least as favorable, and, for the purposes of such
plan, Executive shall receive credit for the entire period of his employment with PNMAC (including his employment with PNMAC prior
to the execution of this Agreement). To the extent that anything contained in any such plans or programs is in conflict or inconsistent
with anything stated in this Agreement, the terms of this Agreement shall control and supersede any contrary language except as
prohibited by law. In addition, PNMAC shall pay Executive the amount necessary to reimburse Executive for any self-employment tax
liabilities.


 


6.Business Expense Reimbursement.
Executive shall be entitled to reimbursement by PNMAC for any ordinary and necessary business expenses incurred by Executive in
the performance of Executive’s duties and in acting for PNMAC or PFSI during the Term, which types of expenditures shall
be determined by the Board, provided that:


 


(a)Each such expenditure is of a nature qualifying
it as a proper deduction on the federal and state income tax returns of PNMAC as a business expense and not as deductible compensation
to Executive; and


 


(b)Executive furnishes to PNMAC adequate records,
including receipts for any expenditures greater than twenty-five dollars ($25.00), and other documentary evidence required by federal
and state statutes and regulations issued by the appropriate taxing authority for the substantiation of such expenditures as deductible
business expenses of PNMAC and not as deductible compensation to Executive.


 


7.Termination. During the Term, Executive’s
employment may be terminated only as provided in this Section 7. Except as set forth in this Agreement, the Company shall have
no further obligation to Executive or liability under this Agreement by way of compensation, post termination benefits or obligations
or otherwise upon the Termination Date. Notwithstanding anything to the contrary in this Agreement or any other document, the termination
of Executive’s employment for any reason shall not affect Executive’s ownership of Class A Units of PNMAC or Class
A Common Stock of PFSI, and shall not affect Executive’s entitlement to all benefits which have vested or which are otherwise
payable in respect of periods ending prior to the termination of his employment; provided, however, that upon Executive’s
termination, PFSI shall have the right to exchange Executive’s Class A Units of PNMAC into Class A Common Stock of PFSI pursuant
to and in accordance with the terms of the Exchange Agreement dated May 8, 2013 between PNMAC, PFSI and the Company Unitholders
(as defined therein) (the “Exchange Agreement”).




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(a)Disability. In the event that Executive
qualifies for permanent disability benefits under PNMAC’s long term disability plan (the “LTD Plan”), or if Executive
does not participate in the LTD Plan, would have qualified for permanent disability had Executive been a participant of the LTD
Plan (a “Disability”), Executive’s employment hereunder may be terminated, by written Notice of Termination (as
that term is defined in Section 7(g) herein) from PNMAC to Executive. Upon termination by PNMAC due to Executive’s Disability
under this Section 7(a), Executive shall be entitled to: (i) his base salary in effect as of the Termination Date through and including
the Termination Date (as that term is defined in Section 7(g) herein); (ii) if not previously paid prior to the Termination Date,
incentive based compensation as described in Sections 5(b) and 5(c) of this Agreement for the year prior to the Fiscal Year in
which the Termination Date occurs; (iii) accrued but unused PTO through the Termination Date; (iv) reimbursement of any unreimbursed
expenses incurred by Executive pursuant to Section 6 of this Agreement; (v) a prorated share of the incentive based compensation
described in Sections 5(b) and 5(c) for the Fiscal Year in which the Termination Date occurs, payable in accordance with those
Sections, and (vi) continuing medical benefits as set forth in Section 5(e) herein. In addition, in the event Executive’s
employment is terminated pursuant to this Section 7(a), all unvested Class A Units of PNMAC and Class A Common Stock of PFSI held
by Executive, and, as applicable, any other Award (as that term is defined in the EIP) granted to Executive pursuant to the EIP,
shall become immediately and fully vested. The determination of Disability shall be made only after sixty (60) days’ notice
to Executive and only if Executive is not able to perform his duties with or without reasonable accommodation prior to the expiration
of the sixty (60) day notice period.


 


(b)Death. In the event that Executive
dies during the Term of this Agreement, this Agreement shall automatically terminate on the date of Executive’s death. Upon
termination by PNMAC due to Executive’s death pursuant to this Section 7(b), Executive’s estate shall be entitled to:
(i) continuing payment of Executive’s base salary as of the Termination Date through the Termination Date and for a period
of six (6) months following the Termination Date; (ii) if not previously paid prior to the Termination Date, incentive based compensation
as described in Sections 5(b) and 5(c) of this Agreement for the year prior to the Fiscal Year in which the Termination Date occurs;
(iii) accrued but unused PTO through the Termination Date; (iv) reimbursement of any unreimbursed expenses incurred by Executive
pursuant to Section 6 of this Agreement; (v) a prorated share of the incentive based compensation described in Sections 5(b) and
5(c) for the Fiscal Year in which Executive dies payable in accordance with those Sections; and (vi) continuing medical benefits
as set forth in Section 5(e) herein. In addition, in the event of Executive’s death, all unvested Class A Units of PNMAC
and Class A Common Stock of PFSI held by Executive, and, as applicable, any other Award (as that term is defined in the EIP) granted
to Executive pursuant to the EIP, shall become immediately and fully vested.


 


(c)Termination for Cause. PNMAC may
terminate Executive’s employment under this Agreement for “Cause” by written Notice of Termination. A termination
for Cause is a termination by reason of: (i) a material breach of this Agreement (other than as a result of incapacity due to death
or Disability) which is committed by Executive in bad faith and which is not remedied within thirty (30) days of Executive’s
receipt of a notice to cure such breach; (ii) Executive’s conviction by a court of competent jurisdiction of a felony involving
dishonesty or moral turpitude, provided, however, that any convictions solely on the basis of vicarious liability shall
not give PNMAC the right to terminate Executive for Cause; (iii) entry of an order duly issued by any federal or state regulatory
agency having jurisdiction of the matter removing Executive from office of PNMAC or its subsidiaries or permanently prohibiting
him from participating in the conduct of the affairs of PNMAC or any of its subsidiaries; or (iv) proven acts of fraud or willful
misconduct committed by Executive in connection with the performance of his duties under Section 2 of this Agreement which result
in material injury to PNMAC. In the event of a termination for Cause pursuant to this Section 7(c), Executive shall be entitled
to receive (a) his base salary for the entire period up to and including the date of Executive’s termination for Cause; (b)
accrued but unused PTO through the Termination Date; and (c) reimbursement of any unreimbursed expenses incurred by Executive pursuant
to Section 6 of this Agreement. If Executive is convicted of a felony involving dishonesty or moral turpitude or removed from office
and/or prohibited from participating in the conduct of the affairs of PNMAC or any of its subsidiaries by any federal or state
regulatory agency having jurisdiction of the matter, and if the charges resulting in such removal or prohibition are ultimately
dismissed or if a final judgment on the merits of such charges is issued in favor of Executive, or if the felony conviction is
overturned on appeal, then Executive’s termination shall be treated as a Termination Other Than for Cause pursuant to Section
7(d).




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(d)Termination Other Than for Cause.
The Company may terminate Executive’s employment other than for Cause (including the expiration of Executive’s Term
pursuant to Section 1 above) or Executive may terminate his employment for Good Reason as that term is defined in this Section
7(d). If Executive’s employment terminates pursuant to this Section 7(d), then Executive shall be entitled to (i) his base
salary in effect as of the Termination Date through and including the Termination Date (as that term is defined in Section 7(g)
herein); (ii) if not previously paid prior to the Termination Date, incentive based compensation as described in Sections 5(b)
and 5(c) of this Agreement for the year prior to the Fiscal Year in which the Termination Date occurs; (iii) accrued but unused
PTO through the Termination Date; (iv) reimbursement of any unreimbursed expenses incurred by Executive pursuant to Section 6 of
this Agreement; (v) a prorated share of the incentive based compensation described in Sections 5(b) and 5(c) for the Fiscal Year
in which the Termination Date occurs, payable in accordance with those Sections, and (vi) continuing medical benefits as set forth
in Section 5(e) herein. In addition, in the event Executive’s employment is terminated pursuant to this Section 7(d), all
unvested Class A Units of PNMAC and Class A Common Stock of PFSI held by Executive, and, as applicable, any other Award (as that
term is defined in the EIP) granted to Executive pursuant to the EIP, shall become immediately and fully vested.


 


For purposes of this Agreement, Executive will
have “Good Reason” to terminate this Agreement if PNMAC (or any resulting or surviving entity in the event of a Transaction
as defined in Section 5(c) of this Agreement) (1) materially breaches this Agreement; (2) requires Executive to report to anyone
other than the Board; (3) requires that Executive be based anywhere more than fifty (50) miles from the office where Executive
is located as of Effective Date; (4) takes any other action which results in a material diminution or adverse change in Executive’s
status, title, position, compensation, or responsibilities as of the Effective Date, other than an insubstantial action not taken
in bad faith and remedied promptly after receipt of notice by Executive; or (5) fails to indemnify and advance all expenses to
Executive in response to a proper request for indemnity and advancement by Executive, provided, however, Executive’s
resignation for Good Reason will only be effective if Executive provides written notice to the Company of the events constituting
the Good Reason within ninety (90) days after the occurrence of any such event, and the Company does not cure said events within
thirty (30) days after receipt of the notice. In addition, Executive will have “Good Reason” to terminate this Agreement
at his option at any time on or after June 11, 2017, subject only to the notice provisions set forth in Section 7(g).


 


(e)Termination Following a Change of Control.
This Agreement and Executive’s employment shall not automatically terminate due to a “Change of Control” as that
term is defined in the PNMAC LLC Agreement. In the event of a Change of Control, PNMAC shall take all actions necessary to ensure
that the surviving or resulting entity, if other than PNMAC, is bound by and shall have the benefit of the provisions of this Agreement.


 


(f)Voluntary Resignation. Except as
provided in Section 7(d), in the event that Executive resigns voluntarily during the Term of this Agreement, Executive shall be
entitled to receive (a) his base salary for the entire period up to and including the date of Executive’s Termination Date;
(b) accrued but unused PTO through the Termination Date; and (c) reimbursement of any unreimbursed expenses incurred by Executive
pursuant to Section 6 of this Agreement.


 


(g)Notice of Termination. Any purported
termination by PNMAC or by Executive shall be communicated by a written notice of termination (the “Notice of Termination”)
to the other party hereto which indicates the specific termination provision in this Agreement, if any, relied upon and which sets
forth in reasonable detail the facts and circumstances, if any, claimed to provide a basis for termination of Executive’s
employment under the provision so indicated. For purposes of this Agreement, and except as expressly provided otherwise herein,
no such purported termination shall be effective without such Notice of Termination. The “Termination Date” shall mean
the date specified in the Notice of Termination, which shall be not less than thirty (30) and not more than sixty (60) days from
the date of the Notice of Termination; provided, however, that in the event of the expiration of the Term of this Agreement
pursuant to Section 1 herein, the Termination Date shall be the three year anniversary of the Effective Date of this Agreement.




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(h)Consulting. Upon (i) expiration
of the Term pursuant to Section 1 herein, (ii) termination of this Agreement pursuant to Section 7(d) herein, Executive shall serve
as a consultant to PNMAC (or in the event of a Transaction, to the surviving entity or parent) for an eighteen-month period commencing
on the Termination Date (the “Consulting Period”); provided, however, that if Executive remains employed with
PNMAC following the expiration of the Term pursuant to Section 1 herein, then the Consulting Period shall commence on the first
day after Executive ceases to be employed by PNMAC. During the Consulting Period, Executive shall make himself available for consulting
services concerning PNMAC’s (or its successor’s) general operations if and as may be reasonably requested by PNMAC
after taking into account Executive’s then full-time, non-PNMAC-related employment opportunities, provided that (a)
the consulting services shall be rendered at such location(s) as may be mutually agreed upon by Executive and PNMAC and (b) the
nature of and time required for the consulting services do not interfere with Executive’s personal and professional activities.
The consulting services shall be of an advisory nature and, in his role as a consultant, Executive shall have no power to bind
PNMAC. In consideration for the consulting services described in this Section 7(h), PNMAC shall pay to Executive a retainer in
monthly installments during the entire Consulting Period, with each monthly payment equal to one-twelfth of Executive’s median
annual base salary and one-twelfth of Executive’s median annual incentive compensation, as calculated based on Executive’s
annual base salary and target incentive compensation for the year in which the Termination Date occurs and his annual base salary
and actual incentive compensation for the two preceding years; provided, however, that the consulting relationship shall
automatically terminate, and Executive shall not be entitled to continue receiving monthly payments under this Section 7(h), if
he, directly or indirectly, engages in, provides services to, works for, consults with, owns, invests in or operates, any business
that competes with the business of PNMAC (or in the event of a Transaction, of the surviving entity or parent). The Company shall
provide Executive written notice if it contends Executive has breached any provision in this Section 7(h), and Executive shall
have thirty (30) days following receipt of such notice to cure any alleged breach.


 


(i)Disputes. In consideration of the
Company employing Executive, and the salary and benefits provided under this Agreement, Executive and the Company agree that all
claims arising out of or relating to this Agreement or the breach thereof, or Executive’s employment, including its termination,
and/or the enforceability and validity of the arbitration agreement set forth in this Agreement, shall be resolved by binding arbitration
pursuant to Section 12(e) below. This Agreement expressly does not prohibit either party from filing an application for a provisional
remedy to prevent actual or threatened irreparable harm in accordance with California law.


 


(j)Restriction on Timing of Distributions.
The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A
and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the
maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. Notwithstanding the foregoing, the
Company does not warrant to Executive that all amounts paid or delivered to him will be exempt from, or paid in compliance with,
Code Section 409A. Accordingly, Executive understands and agrees that he bears the entire risk of any adverse federal, state or
local tax consequences and penalty taxes which may result from payment under this Agreement and he acknowledges that he has been
given the opportunity to consult with a tax advisor with respect to this Agreement. If Executive notifies PNMAC that Executive
believes that any provision of this Agreement (or any award of compensation, including equity compensation or benefits) would cause
him to incur any additional tax or interest under Code Section 409A and PNMAC concurs, or PNMAC independently makes such determination,
PNMAC shall use reasonable efforts to reform such provision to the extent possible to comply with Code Section 409A; provided,
that, such modification shall, to the maximum extent practicable, maintain the original intent and economic benefit to the
parties of the applicable provision without violating the provisions of Code Section 409A.




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If and to the extent necessary to comply with
Code Section 409A, for the purposes of determining when amounts otherwise payable on account of Executive’s termination of
employment under this Agreement will be paid, “terminate”, “terminated” or “termination” or
words of similar import relating to Executive’s employment with the Company, as used in this Agreement, shall be construed
as the date that Executive first incurs a “separation from service” within the meaning of Code Section 409A from the
Company. In applying Code Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments
under this Agreement shall be treated as a right to a series of separate payments. Any taxable reimbursement of business or other
expenses provided for under this Agreement shall be subject to the following conditions: (i) the expenses eligible for reimbursement
in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year; (ii) the reimbursement
of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii)
the right to reimbursement shall not be subject to liquidation or exchange for another benefit.


 


8.Indemnity, Advancement and Insurance.
To the fullest extent permitted by applicable law, the PNMAC LLC Agreement, or any indemnity agreements entered into from time
to time between PNMAC or PFSI and Executive, PNMAC or PFSI, as applicable, (or in the event of a Change of Control as described
in Section 7(e), the surviving or resulting entity or transferee) shall indemnify Executive and hold him harmless for any acts
or decisions made by him in good faith while performing services for PNMAC and/or PFSI, and shall advance to Executive all fees
and costs associated with the defense of any action or proceeding for which he has tendered an appropriate indemnification demand.
PNMAC further agrees that it will provide Executive with appropriate “directors’ and officers’ insurance”
coverage (as described in Section 6.4 of the PNMAC LLC Agreement) in each case in connection with the performance of his duties
under this Agreement, but Executive’s right to indemnity and advancement pursuant to this Section shall not be dependent
or contingent upon the availability of insurance coverage.


 


9.Reimbursement for Legal Fees. Upon
submission of appropriate invoices by Executive, PNMAC shall reimburse Executive for all reasonable legal fees and expenses incurred
by Executive in connection with the preparation and negotiation of this Agreement.


 


10.No Obligation to Mitigate. Executive
shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise
and, except as otherwise expressly provided under this Agreement, no payment hereunder shall be offset or reduced by the amount
of any compensation or benefits provided to Executive in any subsequent employment or business venture.


 


11.Non-Solicitation. During the Term
of this Agreement, and for eighteen (18) months following the Termination Date, Executive shall not, directly or indirectly, either
for or on behalf of himself or any other person or entity, solicit or induce or attempt to solicit or induce any employee, consultant,
independent contractor, agent or representative of the Company, or any parent, subsidiary or affiliate thereof, to discontinue
employment or engagement with the Company or any parent, subsidiary or affiliate thereof; or otherwise interfere or attempt to
interfere with the relationship between the Company, or any parent, subsidiary or affiliate thereof, and their employees, consultants,
independent contractors, agents or representatives.


 


12.Miscellaneous.


 


(a)Succession; Assignment. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their respective executors, administrators, successors
and assigns. The parties agree that the obligations and duties of Executive are personal and are not assignable.




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(b)Notice. Any notice, request, demand
or other communication required or permitted hereunder shall be deemed to be properly given when personally served in writing or
by facsimile, when deposited in the United States mail, postage prepaid, or when communicated to a public telegraph company for
transmittal, addressed to the party at the address appearing at the beginning of this Agreement. Either party may change its address
by written notice in accordance with this Section 12(b).


 


(c)Entire Agreement; Modification.
Except as otherwise provided herein, this Agreement contains the entire agreement of the parties with respect to the subject matter
herein, and supersedes any and all other prior or contemporaneous agreements, either oral or in writing, between the parties hereto
with respect to the employment of Executive by PNMAC. This Agreement may not be modified or amended by oral agreement, but only
by an agreement in writing executed by PNMAC, PFSI and Executive.


 


(d)Waiver. Any waiver of a breach of
any provision hereof shall not operate as or be construed as a waiver of any subsequent breach of the same provision or any other
provision of this Agreement.


 


(e)Governing Law, Venue Selection, and
Arbitration. This Agreement is to be governed by and construed in accordance with the laws of the State of California without
regard to its choice of law provisions. The parties hereto agree that this Agreement was negotiated and executed in Los Angeles,
California. Any controversy, dispute or claim arising out of or relating to this Agreement, the breach thereof, Executive’s
employment, including the termination thereof, and/or the enforceability or validity of this arbitration agreement, shall first
be settled through good faith negotiation. If the dispute cannot be settled through negotiation, the parties agree to binding arbitration
administered by JAMS pursuant to its Employment Arbitration Rules & Procedures and subject to JAMS Policy on Employment Arbitration
Minimum Standards of Procedural Fairness. Executive acknowledges that he has been provided a copy of the JAMS rules contemporaneously
herewith. The parties agree that any such arbitration will be heard in Los Angeles, California, and that judgment on any arbitration
award may be entered in any court having jurisdiction. The Company shall pay the arbitration administrative costs and the arbitrator’s
fees in accordance with California law and the JAMS rules. Each party will bear its/his own attorneys’ fees and legal costs,
provided, however, (i) if any party prevails on a statutory claim which affords the prevailing party attorneys’ fees
or legal costs, the arbitrator may award reasonable attorneys’ fees and/or legal costs to the prevailing party to the extent
permitted by applicable law, or (ii) if any party prevails on a non-statutory claim, the arbitrator shall award reasonable attorneys’
fees and/or legal costs to the prevailing party to the extent permitted by applicable law. The parties agree to file any demand
for arbitration within the time limit established by the applicable statute of limitations for the asserted claims. Failure to
demand arbitration within the prescribed time period shall result in waiver of said claims. EXECUTIVE UNDERSTANDS AND AGREES THAT
HE IS WAIVING HIS RIGHTS TO BRING SUCH CLAIMS TO COURT, INCLUDING THE RIGHT TO A JURY TRIAL.


 


(f)Acknowledgment of Past Performance and
Mutual Releases. This Agreement supersedes the April 2013 Employment Agreement. The parties hereby agree and acknowledge that
Executive, PNMAC, and PFSI have met all of their respective performance obligations under the April 2013 Employment Agreement,
and that, upon the execution of this Agreement, Executive, PNMAC, and PFSI will not have any remaining obligations or liabilities
in connection with the April 2013 Employment Agreement. It is the intention of Executive, PNMAC and PFSI that this Agreement shall
be effective as a full and complete release of any claims they (or their successors or assigns) may have in connection with the
April 2013 Employment Agreement. In furtherance of this intention, Executive, PNMAC, and PFSI each acknowledge and agree to waive
any rights or benefits they may have under Section 1542 of the California Civil Code, which reads as follows: “A general
release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing
the release, which if known to him or her must have materially affected his or her settlement with the debtor.” Executive,
PNMAC, and PFSI each covenant not to bring any lawsuit related to or arising out of the April 2013 Employment Agreement.




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(g)Confidential Information. Executive
agrees that he will not use, divulge or otherwise disclose, directly or indirectly, any trade secret, business process, or other
confidential information concerning the business or policies of PNMAC or any of its subsidiaries which he may have learned, obtained,
accessed or developed during the course of his employment with the Company, including prior to the Effective Date of this Agreement,
except to the extent such use or disclosure is: (i) necessary or appropriate to the performance of this Agreement and in furtherance
of PNMAC’s best interests; (ii) required by applicable law; (iii) lawfully obtainable from other sources; or (iv) authorized
by PNMAC. The provisions of this subsection shall survive the expiration or termination of this Agreement for any reason.


 


(h)Severability. Should any provision
of this Agreement for any reason be declared invalid, void, or unenforceable by a court of competent jurisdiction, the validity
and binding effect of any remaining provisions shall not be affected, and the remaining provisions of this Agreement shall remain
in full force and effect as if this Agreement had been executed without the inclusion of said provision.


 


(i)Interpretation. If any claim is
made by any party hereto relating to any conflict, omission or ambiguity of this Agreement, no presumption or burden of proof or
persuasion shall be implied by reason of the fact that this Agreement was prepared by or at the request of any particular party
hereto or such party’s counsel. Executive acknowledges that he has been represented by counsel of his choice throughout the
negotiation and drafting of this Agreement.


 


(j)Counterparts. This Agreement may
be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute
one and the same instrument.


 


 


 


 


In
Witness Whereof, the parties hereto have executed this Agreement as of the day and year first above written.


 


	
        PRIVATE NATIONAL mORTGAGE
        

ACCEPTANCE COMPANY, LLC: 

         

        By: /s/ Jeffrey P. Grogin

        Name: Jeffrey P. Grogin

        Title: Chief Administrative and Legal Officer
	
        PENNYMAC FINANCIAL SERVICES,
        INC.:

        

        

        By: /s/ Matthew Botein

        Name: Matthew Botein

        Title: Chairman of the Compensation Committee

        of the Board of Directors

	 	 
	 	
        EXECUTIVE: 

         

        /s/ Stanford L. Kurland

        Stanford L. Kurland



 




 


 


 






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